Final Exam Org Strategy and Policy Dr. Perez Batres MSU

Let's Talk Corp. is a public company whose shares are currently trading in the market at $150 each. The company manufactures smartphones at the cost of $300 per unit and sells them in the market for $500 each. What is the company's producer surplus?

$200

Which of the following firms most likely has the lowest bargaining power as a buyer?

A cell phone company that requires highly customized software for its phones

Swiss-based Nestlé, the largest food company in the world, is well known for customizing its product offerings to suit local preferences, tastes, and requirements. Which of the following strategies does the company pursue?

A multidomestic strategy

Which of the following statements about patents is not true?

A patent over a product translates into a permanent monopoly position.

If a firm is not effectively organized to exploit the competitive potential of a valuable, rare, and costly to imitate (VRI) resource, the best case scenario is

A temporary competitive advantage

There are several benefits of horizontal integration. Which of the following below is not a benefit?

Access to new marketing and sales divisions

Trek Inc., a large conglomerate, took over a small startup company that had made some breakthrough innovations in the field of telecommunications. This purchase would help Trek to gain access to the startup company's superior technology and human capital. This transaction is an example of a(n)

Acqusition

Which of the following statements is true of strategy?

Actions that allow a firm to address a competitive challenge are strategy.

A firm's _______ are best described as distinct and fine-grained business processes such as order taking, physical delivery of products, or invoicing customers.

Activities

Which of the following best illustrates a strategic alliance?

All Pharma Inc. teaming up with a research company to invent and market breakthrough vaccines

Which of the following is an example of related-constrained diversification?

An automobile company that manufactures petrol cars expanding into the diesel car industry

Janet is a marketing and sales employee at 4-Ever-Foods Inc. She has invented a new way to process and pack the company's food products that would avoid the usage of chemical preservatives. Which of the following terms best describes Janet?

An intrapreneur.

A diagnosis of the competitive challenge, an element of a good strategy, is primarily accomplished through strategy

Analysis

When a firm reconfigures components of an existing technology to enter into new markets, they are said to be employing

Architectural innovation.

The rationale behind related diversification is to

Benefit from economies of scale and scope.

While SMART Tech Inc. incurs $350 to manufacture a laptop, its competitor, Better Electronics Inc., incurs $300. However, laptops of both the companies have been able to create the same value among customers. From the given scenario, it can be inferred that

Better Electronics and SMART Tech share a differentiation parity.

Which of the following groups is most likely to be considered a firm's internal stakeholder?

Board Members

In the 1980s, Japanese competitors brought better-quality chips to the market at lower cost, threatening Intel Corporation's position and strategic plan regarding the production of DRAM (dynamic random-access memory) chips. When the functional managers at Intel came up with the simple rule of producing whichever product delivered the higher margin, the front-line managers shifted Intel's production capacity away from the lower-margin DRAM business to the higher-margin semiconductor business. This ________ emerged as a consequence of the firm's resource allocation process.

Bottom-up strategy

How has Walmart staked out a unique strategic position?

By cutting costs to offer lower prices than competitors

There are several cost drivers that can be managed in order to establish a low-cost leadership advantage. One of the primary cost drivers is

Combining experience-based learning and process innovation to move onto a steeper learning curve.

Global strategy is a firm's quest to gain a(n) ________ when competing against foreign companies around the world.

Competitive advantage.

Strategic-group mapping establishes that

Competitive rivalry is strongest between firms that are within the same strategic group.

Some scholars have added a sixth force to Porter's Five Forces model. This sixth force, ________, is believed to add value to the original product offering (or service) when the two are used in tandem.

Complement

William estimated that a pair of Perfect Fit jeans would be worth $60 for its brand and durability. However, at the Perfect Fit store, the pair of jeans he wanted was available for $45. The difference of $15 in this scenario is referred to as the

Consumer surplus.

According to the Level-5 leadership pyramid, the Level 2 manager is a(n)

Contributing team member.

The strategic foundations of the globalization hypothesis are based primarily on

Cost reduction.

ACME Inc. has retained you to review their low-cost strategy for their company. Based on several consultations with the client, you realize that their per unit costs are actually increasing as their business grows and expands. You conclude that this firm is experiencing

Diseconomies of scale

Which of the following innovations below is said to invades an existing market from the bottom up by leveraging novel technologies in order to penetrate existing markets?

Disruptive innovation.

Which of the following statements is true of the Level-5 leadership pyramid?

Each level of leadership builds upon the previous one in the pyramid.

The value of goods/services in the eyes of consumers is static which makes it difficult to accurately assess what someone is willing to pay for that product and service. This limitation is most directly tied to which of the following multi-dimensional perspective below?

Economic value creation

The idea that all available information about a firm's past, current state, and expected future performance is embedded in the market price of the firm's stock is called the

Efficient-market hypothesis.

All of the following below are examples of external stakeholders except

Employees

According to Porter's diamond of national competitive advantage, factor conditions are best described as a country's

Endowments in terms of natural, human, and other resources.

Which of the following statements does the upper-echelons theory support?

Executives interpret situations through the lens of their unique perspectives, shaped by personal circumstances, values, and experiences.

Radical innovation occurs when an existing firm recombines its ________ with a new stream of knowledge for ________.

Existing knowledge; new markets

In the ________, firms change the underlying technology while holding cumulative output constant.

Experience curve

Ez Solutions Inc. has been operating in the country of Jamtland for almost a decade. The nation is currently experiencing an economic downturn. Which of the following is the most likely benefit of this economic condition for Ez Solutions Inc.?

Ez Solutions Inc. will have better access to highly skilled human capital at a lower cost.

Tyrell Corporation is an electronics company based in the country of Palmia. The company has manufacturing facilities in four other countries where labor costs are low. It also has its research centers in three other countries because these countries offer best-of-class capabilities. However, Tyrell Corporation does not offer much product differentiation, which means that price is the main competitive weapon. In this scenario, Tyrell Corporation most likely implements a __________ strategy.

Global-standardization

The greater the difference between value creation and cost, the

Greater a firm's economic contribution.

Firms enter strategic alliances to

Have a positive effect on economic value creation.

An inverted U-shaped relationship between the type of diversification and overall firm performance indicates that

High and low levels of diversification are generally associated with lower overall performance.

To secure a strong strategic position in fast-growing emerging markets, which of the following corporate strategies did Kraft Foods primarily pursue by acquiring Cadbury?

Horizontal integration

Firms often consolidate industries through horizontal mergers and acquisitions to

Increase their market power.

The relative bargaining power of suppliers is most likely low when

Incumbent firms face low switching costs when changing suppliers.

A firm's ________ strategy is likely to fall by the wayside because of unpredictable events and turn into unrealized strategy.

Intended

The amount that savers are paid for use of their money and the amount that borrowers pay for that use is best described as a(n)

Interest rate.

Which of the following is a feature of a fragmented industry?

It consists of many small firms.

Which of the following is not a disadvantage of the balanced scorecard approach?

It fails to allow managers to prepare the company for future growth.

Which of the following statements is true of local responsiveness?

It generally entails higher costs.

Too Fast Inc., a motorcycle company, is the market leader due to its superior engine technology and service orientation. These unique qualities have helped the company generate revenues that are consistently higher than other firms in the same industry. Which of the following can be concluded about Too Fast Inc. from this scenario?

It has a competitive advantage over the other firms.

A nonequity alliance is the most common type of strategic alliance because

It is easy to initiate and terminate.

Which of the following statements is true of an oligopoly?

It is often analyzed using game theory.

An experience curve attempts to capture both

Learning effects and process improvements.

Which of the following statements accurately brings out the difference between economies of scale and learning effects?

Learning effects occur over time, whereas economies of scale are captured at one point in time when output is increased.

Let's Roll Inc. and Ride 4 Ever Cycles Inc. are two competing motorcycle companies. While Let's Roll's Cost of goods sold/Revenue is 63.4 percent, the Cost of goods sold/Revenue of Ride 4 Ever Cycles is 54.2 percent. What do you infer from this financial data?

Let's Roll is less efficient than Ride 4 Ever Cycles in producing goods.

Stan has been recently promoted to the position of a team lead at an insurance company. This promotion was based on his boss's assessment that Stan is capable of conveying the company's vision and mission to groups. As a result, he can guide groups to superior performance. From this scenario, we can say that Stan is currently at __________ of the Level-5 leadership pyramid.

Level 4

A large conglomerate is deciding on the range of new products and services it can offer to its customers to further expand its operations. This decision determines the firm's

Level of diversification

North Carolina National Bank (NCNB) used its unique core competency of identifying, appraising, and integrating acquisition targets to be rebranded as Bank of America, one of the largest banks in the United States. This is an example of a firm

Leveraging existing core competencies to improve current market position.

If a company has 25 million shares outstanding, and each share is traded at $400, the ________ is $10 billion.

Market capitalization

A(n) ________ is used to describe the combining of two companies that are equal in size.

Merger

In the financial year 2016, for every $100 in revenues, Microsoft earned $21.5 in profit, while Apple earned $20.6 in profit. This demonstrates that

Microsoft's return on revenue was higher than that of Apple.

An organization's ________ describes what the organization actually does—the products and services it plans to provide, and the markets in which it will compete.

Mission

All of the following are tools primarily used to achieve cost-leadership except

Offering products at a premium price.

There exist important trade-offs between value creation and low cost because value creation and cost tend to be

Positively correlated

A firm is likely to have a competitive advantage when it

Provides services that consumers will value more than those of its rivals.

If a pharmaceutical company develops a first-of-its-kind vaccine to prevent HIV/AIDS and thus creates a whole new market for the product (non-infected civilians), it would be a(n) _________ innovation.

Radical

Amazon expanded its single-product business by leveraging spare capacity into cloud computing and by offering its Kindle line of tablet computers and Echo line of digital assistants. This is an example of

Related-linked diversification.

Companies from wealthy countries tend to trade with other rich countries rather than poor countries because they can

Replicate their existing business model more easily.

A firm decides to retain $20,000 from its annual earnings and invest it in developing an advanced manufacturing system. According to the dynamic capabilities perspective, the $20,000 would most likely be referred to as the firm's

Resource flow

Even though Easy Speak Inc. and KM Com Inc. operate in the same industry—telecommunications—each firm has a different and loyal customer base. While Easy Speak Inc. attracts young students and professionals through its efficient network coverage and pricing, KM Com Inc. attracts elderly customers solely due to its excellent customer service. Thus, both firms draw their strengths from distinct resource bundles. Which of the following assumptions of the resource-based model of competitive advantage does this scenario best illustrate?

Resource heterogeneity

________ is an important tool because it allows a manager to recognize, prioritize and address the needs of various stakeholders.

Stakeholder impact analysis.

Which of the following SWOT factors are internal to the firm?

Strengths and weaknesses

When a blue ocean strategy is successfully formulated and implemented, investments in differentiation and low costs are not

Substitutes but complements.

When the Alta Velocidad Española (AVE) was completed, it impacted Spain's local airline industry. Which of the following statements about the five forces does this reflect?

Substitutes made it difficult for generating a profit potential in Spain's airline industry.

One major limitation of using accounting profitability as a measure for competitive advantage is its focus on ________ versus ________.

Tangible assets; intangible assets

The best explanation of why Gulf airlines are giving U.S. legacy carriers stiff competition is that the Gulf carriers

The Gulf carriers offer better service for lower costs than do the U.S. legacy carriers.

Which of the following statements is true of the real-options perspective?

The approach allows the incumbent firm to obtain additional information at predetermined stages.

Which of the following is a feature of Logitech as a global collaboration network?

The company has been able to organize work continuously because its teams in different locations around the globe can work 24/7.

If a company chooses to keep its vision customer-oriented rather than product-oriented, what will be the implication of that decision?

The company will tend to be more flexible when adapting to changing environments.

The auditor of a public company is assessing the value of all the intangible assets owned by the company. Which of the following would most likely be included in this assessment?

The company's brand equity

According to the CAGE distance framework, what does cultural distance represent?

The cultural disparity between an internationally expanding firm's home country and its targeted host country

Which of the following actions of an automobile firm will be considered as a strategic commitment?

The firm investing eight years and $4 billion to develop a range of hybrid cars with which it will compete in the future

According to the crossing-the-chasm framework, a firm's transition between the different parts of the industry life cycle is difficult because

There is a big gulf separating the early adopters from customer segments that make up the mass market.

Which of the following statements is typically true of early adopters?

They appreciate new technology that can add value to their personal and professional lives.

Incumbent firms can benefit from several important sources of entry barriers. Economies of scale are one such source. Which of the following is an implication of economies of scale for incumbent firms?

They can demand better terms from their suppliers.

While most of Savvy Inc.'s competitors were moving toward developing and emerging markets, Savvy Inc. decided to keep its operations limited to its home country so that it could gain some advantage. A few years later, however, Savvy Inc. lost its footing in the home market due to a sharp fall in demand. It then decided to invest in large-scale operations in the same developing nations as its competitors, within a short period of six months. However, its costs kept increasing, so it could not compete against the already established brands. In this scenario, the failure of Savvy Inc. can be best attributed to

Time compression diseconomies

Which of the following is one of the reasons that firms make acquisitions?

To gain access to a new capability or competency

Which of the following was one of the primary reasons why Adidas acquired Reebok?

To overcome a competitive disadvantage

Which of the following best illustrates human-asset specificity?

Training employees on how to operate a customized furnace

When examining the ________ framework, strategic managers are trying to decide on what activities to perform inside the firm and/or outside the firm (external market).

Transaction cost economics

The two primary competitive levers that managers can use in order to answer the question of how to compete are

Value and cost.

The _______ describes the internal activities a firm engages in when transforming inputs into outputs.

Value chain view

A good strategy should be able to provide products and services to customers at an attractive price point while maintaining internal costs, resulting in

Value creation

Which of the following is not one of the VRIO characteristics of competitive advantage?

Variable

Which of the following statements accurately brings out the difference between an organization's vision and mission?

Vision defines what the organization wants to accomplish ultimately, whereas the mission defines the means by which vision is accomplished.

When using the balanced scorecard approach to assess a firm's performance, which of the following is not a key question that managers need to answer?

What intangible assets do we need?

Corporate-level strategy answers ________ a firm should compete.

Where

Which of the following statements accurately brings out the distinction between a firm's resources and capabilities?

While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies.

While the industry for tablet computers is in the growth stage, the laptop industry is in its shakeout stage. What does this imply?

While the market demand for tablets will be high, the demand for laptops will be limited.

In developed countries, the industry for thumb drives is in the maturity stage, and the industry for floppy disks is in the decline stage. What does this imply?

While the thumb drive industry has reached its maximum market size, the market size for floppy disks is small and contracting.